Thailand raises key rate for first time since 2018 to fight inflation

BANGKOK, Aug 10 (Bernama) – The Bank of Thailand (BoT) raised its policy rate by 25 basis points (bps) to 0.75 per cent, the first time in nearly four years, to fight inflation as the economic recovery has continued to strengthen.

The BoT Monetary Policy Committee (MPC) today voted 6-1 to increase the policy rate by 0.25 percentage points from 0.50 to 0.75 per cent, effective immediately, from a record low of 0.50 per cent. One member voted to raise the policy rate by 0.50 percentage points.

The rate was last raised in December 2018.

In a statement, MPC secretary Piti Disyatat said the Thai economy is expected to return to the pre-COVID level by the end of this year and would continue to gain traction.

However, he said headline inflation would remain at a high level for some time.

“Thai economic recovery will continue to gain traction, and thus the extraordinarily accommodative monetary policy has become less needed.

“The committee views that the policy rate should be normalised to the level that is consistent with sustainable growth in the long term,” he said.

He added that monetary policy normalisation should be done in a gradual and measured manner, consistent with the growth and inflation outlook in the period ahead.

Piti said the Thai economy is projected to continue recovering with strong momentum.

“This is attributable to a larger-than-expected number of foreign tourist arrivals following the relaxation of international travel restrictions and improved travel sentiments,” he said. 

The BoT may revise up its 2022 economic growth forecast of 3.3 per cent next month, Piti said.

-- BERNAMA